On July 9, the Ministry of Food and Drug Safety banned the sale and manufacturing of 115 hypertension drugs (made by 54 companies) containing a Chinese-made ingredient valsartan.
The decision came after the European Medicines Agency’s order on July 5 to recall all valsartan made by Chinese firm Zhejiang Huahai due to the detection of N-Nitrosodimethylamine (NDMA). This impurity is a possible carcinogen classified as 2A by the International Agency for Research on Cancer (IARC).
Valsartan is a well-known treatment for high blood pressure, and Novartis’ Diovan is leading the market with the largest prescription sales. In the local market, however, combination drugs mixing two or three medicines have become popular in the hypertension drug market. Among the 115 products banned by the regulator, 28 are valsartan monotherapies, and the rest 87 are combo drugs mixing valsartan and amlodipine (original: Norvasc). Novartis’ Exforge is the original combo drug which is popular as well.
Exforge had some drug pricing issues in 2013 when its patent was near expiration. The details can be found on the Internet.
When Exforge’s patent expired in October 2013, the pharmaceutical industry had expected that the drug price would drop to a 70 percent level (685 won per 5/80mg) from the initially registered price of 978 won. However, in reality, the government set the price by adding the price of Norvasc (524 won) to that of Diovan (980 won) and cut the total price (1,504 won) by 53.55 percent to 805 won.
“We adjusted prices for other combo drugs when the original drug’s patent expired because we did not offer any price cuts at the initial drug pricing. However, in the case of Exforge, the price cut has already been made at the initial drug pricing, so we didn’t adjust the prices later,” the health and welfare ministry said at that time.
However, the Korea Medical Clinic Association vigorously protested the government’s drug pricing, saying it was unfair to put the upper limit of the combo drug by merely calculating a sum of two monotherapies. KMCA added that such drug pricing was beneficial only to the drugmakers.
Then, what does it have to do with the current valsartan debacle?
If a drugmaker cannot develop a new drug, what should it do to make maximum profits? The company should wait for the moment that the original drug, which already proved efficacy and marketability, loses substance patent and quickly make copies. The best-selling original drug would be the target among lifelong treatments of chronic diseases such as hypertension and diabetes.
Under a particular circumstance where local generic drugs are relatively expensive compared to those of the originals, setting the price of the best-selling copy drug high will prompt other drug firms to manufacture generic copies. The reckless competition will lead to cost cuts and marketing wars through illegal rebates. One of the easiest ways to cut costs is to use cheap ingredients, just as seen in the latest valsartan fiasco. The 170,000 hypertension patients’ panic that they might have taken carcinogen-containing drugs might have been warned since the 2013 wrong drug pricing.
Setting the prices of generic drugs at high levels does not guarantee the growth of the local pharmaceutical industry. Rather, the government should help reduce the number of small- and medium-sized drugmakers to make the industry more competitive. When setting the prices for medical care and drug dispensing, the government should make the payment cheap for cheap services, and expensive for expensive services. However, the incumbent administration is doing precisely the opposite. This is why the public health is in danger and physicians become the wrong target of blame.
Seoul officials should wake up and smell the coffee.
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